Question 3 (a) Herbal World is a small, but profitable producer of beauty cosmetics using the plant Aloe Vera. Though it is not a high-tech business, yet Herbal's eamings have averaged around 18.5 lakh after tax, mainly on the strength of its patented beauty cream to remove the pimples. The patent has nine years to run, and Herbal has been offered 50 lakhs for the patent rights. Herbal's assets include50 lakhs of property, plant and equipment and 25 lakhs of working capital. However, the patent is not shown in the books of Herbal World. Assuming Herbal's cost of capital being 14 percent, calculate its Economic Value Added (EVA) SG Mutual Fund Company has the following assets under it on the close of business as on (5 Marks) (b) 1st August 2017 2nd August 2017 Company No. of Shares Market price per share Market price per share ( Q Ltd R Ltd. S Ltd. T Ltd 2,000 30,000 0,000 60,000 200.00 312.40 180.60 505.10 205.00 360.00 191.55 503.90 Total No. of Units issued by the Mutual Fund is 6,00,000. (0) Calculate Net Assets Value (NAV) of the Fund. (i) Following information is also given: Assuming that Mr. Zubin, an investor, submits a cheque of 30,00,000 to the Mutual Fund and the Fund Manager of this entity purchases 8,000 shares of R Ltd; and the balance amount is held in Bank. In such a case, what would be the position of the Fund? (ii) Calculate new NAV of the Fund as on 2nd August 2017 Discuss what you understand about Embedded Derivatives. (10 Marks) (5 Marks) (c)